Ubee Ignored Obligation to Indemnify Charter in Patent Infringement Cases: Complaint

Ubee Interactive refused to honor its contractual obligation to “indemnify and hold harmless and defend” Charter for liability and defense costs arising from patent infringement claims brought by Entropic Communications, said a breach of contract complaint Wednesday (docket 4:24-cv-00199) in U.S. District Court for Eastern Missouri in St. Louis.

Entropic filed an action in April 2022 against Charter and Spectrum in U.S. District Court for Eastern Texas (docket 2:22-cv-00125), seeking damages for alleged infringement of six patents related to certain functions performed by cable modems and set-top boxes, including ones Ubee provided to Charter, the complaint said.

In June 2022, Charter notified Ubee of a third-party claim for patent infringement related to the products it sold to Charter under master purchase agreements (MPA), the complaint said. Charter included a copy of an amended complaint in the Entropic litigation, tendering the case to Ubee “for defense and indemnification” per a 2016 MPA, under which Ubee agreed to indemnify Charter “from and against any and all claims, damages, losses, liabilities and expenses, including attorneys’ fees resulting from third party claims for patent infringement" brought against Charter involving the use or installation of goods supplied by Ubee, it said.

Ubee did not assume defense of the case and didn’t retain counsel to represent Charter, the complaint said. Where Ubee fails to assume the defense of indemnifiable litigation, Charter is “permitted to undertake the defense of the litigation and Ubee is obligated to reimburse” it for costs and expenses of the defense, plus “liabilities and losses relating to the third party claim,” said the complaint. When Ubee and Charter’s other suppliers didn’t assume the cable provider’s defense, they reached an agreement to retain Arnold & Porter to represent Charter and for each equipment supplier’s “provisional share of defense costs” in Entropic’s lawsuit, the complaint said. Ubee agreed to pay 16.7% of Charter’s defense costs, the percentage Ubee’s cable modems represented of the total “accused equipment,” it said.

Despite its agreement to pay its share of defense costs, Ubee made no payment of any invoices from Arnold & Porter or Charter, nor did it respond to repeated requests regarding the status of payments of the invoices, the complaint said. Though Ubee confirmed in May that it was responsible for making the payments, in June it sought to renegotiate its agreement to pay its share of the defense costs; Charter refused, it said. Ubee then rejected defense and indemnification, it said.

Entropic filed another action (docket 2:23-cv-00051) in Eastern Texas district court against Charter in February 2023, asserting that Charter infringed its patents in certain set-top boxes, the complaint said. It also said that the litigation covered set-top boxes and cable modems, it said. Charter notified Ubee of the second litigation in September, but Ubee has denied its defense and indemnification obligations for that case, too, it said. Ubee “repeatedly refused to participate in or contribute to any effort to settle the cases with Entropic,” said the complaint, and Ubee twice rejected Charter’s requests to contribute to the settlement.

Charter and Entropic settled both patent infringement lawsuits Dec. 29, the complaint said. Charter informed Ubee its shares of the settlement amounts were $10.33 million in the first lawsuit and $1.98 million in the second, and its share of the defense costs were $1.7 million and $53,879, the complaint said. Defense costs are now $2.2 million and $92,842, it said.

Charter asserts breach of contract claims related to each Entropic lawsuit and seeks awards requiring Ubee to pay its share of settlement and defense costs for both, the complaint said. Ubee didn’t comment Thursday.